How much can you actually make from solstice?
In this post I will be covering every metric and factor to consider when approximating how much you can actually make from @solsticefi.
At the time of writing solstice currently has:
→ TVL: $275,332,121
→ Holders: 23,664
→ Total Flare Supply: 10,515,161,299
We all know that 8% is currently allocated to the airdrop, but something I do want to mention is that I'm going to be extremely conservative to manage expectations.
I personally believe that 5% will be reserved for the first airdrop with the remaining supply used for subsequent drops. Even with higher milestone being hit which may result in more supply being airdropped I will stick to the 5% for consistency in calculations.
Why do I believe that? Well firstly if you look at YT on exponent the maturity date is on the 11th of March, it would make no sense to be accumulating flares if they airdropped the entire allocation in one sitting. With the assumption that the airdrop takes place in December.
The next point I want to address was tge date, although we are all hoping it takes place in December this year. Ultimately its not guaranteed, as there are certain metrics the team want to achieve before TGE as said by JMEISTER (solstice team) on discord. Personally though I think it has to be done the 21st of December (winter solstice) for the plot.
Now let's do a rough calculation with the current metrics, if we use TVL as a rough indicator for FDV then 5% would be:
275,332,121 x 0.05 = 13,766,606
In the first airdrop with 5% being $13,766,606 distributed we can calculate the price of flare by:
price of flare = airdrop amount / total supply of flares
which would look like:
13,766,606 / 10,515,161,299 = 0.0013
This would mean that:
1 flare = $0.0013
100,000 flares = $130.92
1,000,000 flares = $1309.21
10,000,000 flares = $13,092.15
That was a base case, but we actually want to approximate how much we would actually be getting at TGE, a few things I want to factor in before calculating is dilution. Taking the assumption we launch on the 21st of December.
Dilution is where as you have an influx of users coming and accumulating flares which results in the % of supply you get decreases. An easy way to determine that is by figuring out the dilution factor, meaning how diluted has it become.
This can be derived as how many flares you should be earning per $1 utilized in order to not get a less % of the supply even when more users are onboarded. This means you have to find a way to generate more flares for each $ you put into solstice.
Dilution Factor = Total Flare Supply / TVL
Using the base case above the current Dilution Factor:
Dilution Factor = 10,515,161,299 / 275,332,121 = 38.19
This means that for every $ you put into solstice you should be at least getting 38 flares. By analyzing all current available methods to earn flares the only method that surpasses that is yt which currently gives around 225x multiplier which means for each $ you put in you will get 225 flares.
This trend shows that you have to either take risk and pivot to yt to prevent dilution or accept the dilution. Or chuck more money in I guess if you want lower risk.
But how bad can dilution really be?
I've ran the numbers and here is the assumption I've taken. At day 0 we had approximately $166m TVL with 0 flares, we have today's metric (39 days in) mentioned above and we are going to use these two data point to approximate TVL for tge assuming 21st of December.
By taking an exponential growth rate into consideration we can see almost up to 500m by the TGE (80 days in) assuming it takes place on the 21st of December. Now we have to consider the flares generated by that time, by using a similar exponential grow projection this is what we get:
With approximately 30b flares to be reached based on current growth and 500m TVL locked by TGE (this is done as an assumption to show the effect of dilution) this is how much flare will be worth using the same calculation prior:
500,000,000 x 0.05 = $25,000,000 (amount distributed)
price of flare = airdrop amount / total supply of flares
which would look like:
25,000,000 / 30,000,000,000 = 0.00083 price per flare
Projected evalulation:
1 flare = $0.00083
100,000 flares = $83.33
1,000,000 flares = $833.33
10,000,000 flares = $8,333.33
Compare that to the initial calculation which was:
1 flare = $ 0.0013
100,000 flares = $130.92
1,000,000 flares = $1309.21
10,000,000 flares = $13,092.1
We can see dilution can play a huge factor from $1309.21 down to $833.33 per 1m flares even with increase of TVL. Do keep in mind this was done as projected growth and have been extremely conservative with the supply distributed (5%) and the assumption that TGE takes place on the 21st.
So I do still believe solstice is an airdrop worth farming based on these calculations and encourage everyone to partake in it regardless the amount of money you can put in.
The potential is there its whether you decide to make a move.
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